G20 Chair Says Zambia’s Creditors Commit to Negotiate Restructuring Terms

JAKARTA, July 30 (Reuters) – Zambia’s creditors have pledged to negotiate a restructuring of the country’s debt and expressed support for the “rapid passage” of a proposed $1.4 billion program of the IMF, Indonesia’s G20 president said on Saturday.

The creditors’ committee, co-chaired by China and France, said in a statement released by Indonesia that the restructuring terms would be finalized in a memorandum of understanding and that it “supports the upper credit tranche program ( UCT) of the IMF envisaged by Zambia”.

In 2020, Zambia became the first African country in the era of the pandemic to default. The restructuring of its external debts, which amounted to more than $17 billion at the end of 2021, is considered by many analysts to be a test case.

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The creditors’ committee statement was expected to be enough for the IMF to agree to release the $1.4 billion at a September board meeting, sources familiar with the matter told Reuters last week, details of debt relief to be agreed at future creditors’ meetings. Read more

Zambia reached a service-level agreement with the IMF on the three-year, $1.4 billion extended credit facility in December, subject to its ability to reduce debt to levels the Fund deems viable.

Its creditors’ committee has also called on private creditors to “commit without delay” to negotiating debt relief on terms at least as favorable as those it is considering.

The Zambian government and the IMF did not immediately respond to requests for comment.

On Friday, Zambia’s finance ministry announced it was canceling $2 billion in undisbursed loans. Read more

The first meeting of creditors was held in June, after the Zambian government complained about delays in the restructuring, which is taking place under the Common Framework, a debt relief process launched by the Group of 20 Big Economies in 2020 which has been criticized for being slow to deliver results.

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Reporting by Gayatri Suroyo and Rachel Savage in London; Editing by Stephen Coates and Christina Fincher

Our standards: The Thomson Reuters Trust Principles.

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